RTRS:PRECIOUS-Gold bounces after 2-pct fall; physicals help
* Jewellers buy on dips, premiums rise in Hong Kong
* Coming Up: U.S. consumer confidence data; 1400 GMT
(Updates prices)
By Lewa Pardomuan
SINGAPORE, Aug 30 (Reuters) - Gold regained strength on
Tuesday as bargain hunting resurfaced after prices dropped more
than 2 percent in the previous session, but higher equities and
easing worries about recession in the United States could limit
gains.
The physical market saw demand from jewellers as prices
remained below all-time highs, while main consumer India was
expected to step up purchases before the wedding season resumes
in September.
Spot gold added $10.71 to $1,797.96 an ounce by 0647
GMT. Trading was volatile last week, when gold tumbled more than
$200 towards $1,700 after striking a record at $1,911.46 as
investors sought refuge from the euro zone debt crisis, weakness
in the U.S. economy and volatile currencies.
"I think you can say the market is trying to stabilise and
is in some kind of consolidation mode. $1,780 is support and
then $1,850 will the resistance level. There's a little bit of
bargain hunting," said Ronald Leung, director of Lee Cheong Gold
Dealers in Hong Kong.
"Towards September, jewellers pick up (buying) positions.
Festivals give gold a little bit of support for the time being.
The premiums are increasing due to some demand. There's not much
sales of scrap around."
Hong Kong dealers quoted premiums for gold bars as high as
$1.50 an ounce to spot London prices, from $1.20 last week.
Bullion markets were closed in Singapore, Indonesia and Malaysia
for the Muslim Eid al-Fitr festival.
The festival season in India has started and will peak in
October before tapering off in December. In India, gold
jewellery is an essential wedding gift.
Physical dealers in Tokyo saw selling from local investors,
but they also noted buying interest from China, where demand for
jewellery increases during the Mid-Autumn festival in September.
U.S. gold GCcv1 rose $8.9 to $1,800.5 an ounce, but
investors closely watched equities markets, which gained on
better-than-expected U.S. consumer spending data and a bank
merger in debt-ridden Greece.
U.S. consumer spending rose at its fastest pace in five
months in July, a further sign the economy is not falling back
into recession, although manufacturing activity in Texas almost
stalled this month.
Global equities have rallied on hopes the Federal Reserve
might eventually launch a third round of quantitative easing
(QE3) after Fed Chairman Ben Bernanke left the door open for
further action in a speech on Friday.
The Fed is caught between a struggling recovery and high
unemployment on one side, and political pressures against more
monetary easing on the other. It has already pushed interest
rates close to zero and bought $2.3 trillion in bonds to try to
lower longer-term borrowing costs.
"Given the high inflation environment or rising inflationary
environment, I think, it's likely that they won't announce the
QE3," said Natalie Robertson, a commodities strategist at ANZ.
"In terms of fundamentals, (gold) still looks good. The only
risk to the downside is if the CME raises margin requirements
again."
The CME Group raised margins on gold futures by
about 27 percent last week, the biggest hike in more than two
and a half years and the second increase in a month, as gold
prices fell sharply after a record-setting rally.
Investors await U.S. consumer confidence data for August and
minutes from the Federal Reserve's last committee meeting on Aug
9 for more clues on divisions among board members over further
stimulus measures.
In the energy market, Brent crude rose for a sixth straight
session on Tuesday, buoyed by strong data from the United States
that allayed fears the world's top oil consumer was sliding back
into recession and a landmark bank merger deal in Greece.
